The Exchanges

Q What are you looking for in these research papers? Has it gotten redundant at this point? Like what is new?

A Um, a lot of it is, I just look for inspiration. I think the thing that's happening right now across computer science through at large is these glimpses of what the future will look like. And for a long time in my professional career, academia was always Either too abstract or too far into the future. You'd read a paper. So I spent a lot of my younger years looking at things like cryptography, which was sort of the first love that I, that I've had in, in CS. And you'd look at like homomorphic encryption and be like, wow, that's a fantastically interesting concept, but we don't really have nearly the computes. Like it's not going to be a thing in my immediate professional future, or you'd look at Quantum computing and like quantum attacks and post quantum encryption. And you're like, that's cool. But like, this is really gonna happen in my lifetime. Will they have enough qubits to be dangerous? And with AI, it's different where you're literally reading a paper, like, yeah, somebody's gonna implement it tomorrow and it's gonna be available. And then everyone's gonna take advantage of it. And so you read the papers, like what, what might come next? What, what will be the important news of tomorrow? So it's, you, you have to stay current.

AI assessment note: “a lot of it is, I just look for inspiration.”

Q Why do people get obsessed with beans? Why does that matter?

A It's similar to people who, like, get obsessed with grapes or wine or the right kind of, Water for whiskey. Like it, it, it's just a, it's like infinite complexity in the simple. So you decide that you're really into something. You start asking the question, like, all right, so how can I refine it? And this thing, the patent that describes how this, this thing is called the group head. Can't see most of it, but kind of the, Like inside, like the big steely thing in the center. That's the group head. And, um, it's responsible for the actual production of coffee. And, um, and it's, it's been around for a long time. It's a, the patent that describes the one Pretty similar to this one is from 1961. And so, the machine is sort of the machine. Then you realize that basically you can vary the beans, and the beans are, can be single origin, can be from a variety of plantations and farms. You can, there's multiple ways of converting the green beans into, the beans actually, it's a fruit, and the seed inside the bean Inside the fruit is this thing. So first you need to get the green off, so you can either ferment it, and you can ferment it in In the sun, you can ferment it in other scenarios, then you can wash off or shell off the green, and then you roast it, and then you grind it, and every one of those processes, or every one of those steps can be refined and refined and refined, and …

AI assessment note: “it's like infinite complexity in the simple. So you decide that you're really into”

Q What do you think the biggest misconceptions you're still receiving about Buy Now Pay Leader? What were the biggest hurdles even starting?

A The starting actually wasn't all that hard, and initially people didn't believe that For, for a long time, we would tell people we don't charge late fees, never have, never will. And they're like, yeah, sure. You say that. And we'd say, all right, well, this interest rate is zero. So a lot of our loans have no interest and people are so used to this idea of like, it's a zero percent rate, but there's a tiny asterisk. And if you read the fine print, it's like, ah, it's not really zero. It's zero for now. And then it changes. And so we've built a company to fight all of that. Like we, we are Fastidiously precise about the cost of credit. We don't compound interest specifically to make sure that we can pre-price every loan and say you're borrowing 500 dollars and your total interest charges will be 25 dollars or, or zero dollars if somebody else or merchant is paying your interest for you. And for a long time, consumers were sort of like, yeah, you say that, but there's gotta be something in a fine print. One of our core values is no fine print. To remind ourselves and the rest of the world that we we're not hiding our business model in there. So that was kind of the early stage is probably the hardest thing to persuade people off these days. The perception is actually shifted. Our customers know exactly what we're offering and why we're here and they, they love us for it. I look …

AI assessment note: “initially people didn't believe that For, for a long time, we would tell people we don't charge late fees”

Q this point, and I've can, I can tell that they, they're bored by quarterly reporting, and they're all trying to do different things, like, keep it fun. So I guess with yours, it's big Lebowski quotes. Some of them are doing live streaming. Some of them are doing, like, different kinds of, like, theatrical shows, like, that kind of thing. Like, what, like, how was it, what is it like?

A The board is, is not exactly right. That's an important thing. Like you, you don't want to take to the moment where you're disclosing everything that happened in the last 90 days. You can't make mistakes. You might, might be shareholder fraud, uh, if you, if you do that and, and so on. So you have to be pretty careful. Uh, and it is also a moment where. All eyes, or at least the eyes of those who care are on you. And so it's a, it's a momentous occasion. It's not, it's not a, it's not a joke. In fact, it's so momentous that a lot of people become so wrapped around the axle of like, oh, the quarter's coming up. You know, like I know CEOs, they used to know CEOs that would like lock themselves in a conference room for a week at a time before the quarterly reporting and surround themselves with numbers and pour over the metrics and like really take it very seriously. At which point it becomes more about the quarter than about the actual, more about the report than the quarter. And like, that's definitely a mistake. Like spending a week obsessing over something that happened that ended six weeks prior is clearly a huge waste of time. And so like, how do you balance the need to show up and speak and be intelligent, be interesting, sort of obviously get your analysts to sort of understand what you've done and write Thoughtful notes to your shareholders, but also like you have a compa…

AI assessment note: “it is also a moment where. All eyes, or at least the eyes”

Q As we wrap up, Max Levchin, what is your hottest take right now?

A I'm like the king of cold takes. Everything takes. I'm a very slow thinker. I'm a slow reader. I'm a slow thinker. Everything takes a long time. I go with these super long bike rides just to think about thinking. Um, let's see if I can come up with a hot take for you. If you look at the business models of lenders in the US for sure, probably worldwide. A huge percentage of it is based on sort of two unsightly practices. It's betting on the idea that you'll screw up and won't notice in time, and then I'll make some money, and on the idea that you're not really gonna bother reading the terms and conditions. You're just gonna get your money and, and go, and, and then later on we'll pay for it. And I think with AI as AI actually perforates all the way down to consumers, like not Silicon Valley people, not like normal people in middle America or middle of the world, just using AI tools for the most basic daily tasks with money. This whole genre of let's make money when you least expect it, or let's screw you and hope you don't notice, or let's just charge you some fees because you won't be able to catch on quickly enough. Like all of that is going to get flushed out because no AI is ever going to be like, oh, you've given me a task to find you a good loan. I found one that's going to take advantage of you. Hooray. Like, like absolutely not. Like, we're not going to let that happen t…

AI assessment note: “This whole genre of let's make money when you least expect it... is going to get flushed out”

Q What were the biggest business lessons you learned from PayPal that you carry into a firm?

A The most important lesson is always the team. It is sort of the, the alpha and omega success or failure of a company is the team. And there's an art form to building a company with the corollary to the team or the, maybe the, the, The counter corner, if you will, is the fact that just having a bunch of brilliant people is not actually enough. You need to organize them. You need to sort of give them a mission. You need to give them a way to pursue that mission that feels true to them, but also aligns them all together, which is kind of what leadership is all about. And if you don't have the people, you're definitely going to fail. But even if you do have the people and you don't harness their unique skills and kind of don't correctly Combine them, you might fail anyway. Like in general, startups are, I think the typical rate of a startup failure in the U.S. is like, 85%, so it's easy to fail. It's hard to succeed.

AI assessment note: “The most important lesson is always the team.”